MCA notifies Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2020; Companies (Compromises, Arrangements and Amalgamations) Second Amendment Rules, 2020; and Companies (Auditor's Report) Second Amendment Order

The Ministry of Corporate Affairs has issued a notification dated December 18, 2020 notifying the Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2020; and notifications dated December 17, 2020 notifying (i) Companies (Compromises, Arrangements and Amalgamations) Second Amendment Rules, 2020; and (ii) Companies (Auditor's Report) Second Amendment Order, 2020, prescribed under the Companies Act, 2013 (“CA 2013”). The key amendments are as follows 1. Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2020 a. Rule 6(4) Individuals whose name is included in the data bank are now allowed to appear for an online proficiency self-assessment test (“Online Test”) within two years, from the date of inclusion of his/her name in the data bank. Earlier the time period for the same was 1 (one) year. b. Rule 6(4) First and Second Proviso i. The list of exemption criteria for appearing for the Online Test for an individual has been revised. ii. Tenure of directorship in certain classes of companies, for claiming exemption from Online Test, has been reduced from 10 (ten) years to 3 (three) years. iii. An individual shall be deemed to be passed in an online test, by securing 50% (fifty%) in such Online Test. Earlier the requirement was 60% (sixty%). Please find a copy of the aforesaid amendment here 2. Companies (Compromises, Arrangements and Amalgamations) Second Amendment Rules, 2020 a. Insertion of Rule 2(1)(e) Definition of ‘corporate actions’ has been inserted to mean ‘any action taken by the company relating to transfer of shares and all the benefits accruing on such shares namely, bonus shares, split, consolidation, fraction shares and right issue to the acquirer’. b. Insertion of Rule 26A Procedural aspect in respect of purchase of minority shareholding held in demat form pursuant to the provision of Section 236 of CA 2013 has been inserted. Please find a copy of the aforesaid amendment here. 3. Companies (Auditor's Report) Second Amendment Order, 2020 The applicability of the aforementioned order has been deferred by 1 (one) year. The order is now applicable to accounts to be audited by the auditors for the financial years commencing on or after April 1, 2021. Earlier it was applicable for the financial year commencing on or after April 1, 2020, pursuant to S.O. 1219(E), dated March 24, 2020. Please find a copy of the aforesaid amendment here. This update has been contributed by Arka Majumdar (Partner) and Juhi Wadhwani (Associate).